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Is your company car a free ride?

Posted by on Mar 23, 2015 in BrighterLife, Income Tax | 0 comments

March 10, 2015
By Sheryl Smolkin

Congratulations! You got a big promotion at work and it comes with a company car and free parking. But it may not be an entirely free ride. If any of the value of these new perks is considered a taxable benefit, the Canada Revenue Agency will expect you to pay additional income tax.

If you use the company-owned automobile for personal driving outside of business hours, the T4 your employer issues you must show it as a taxable benefit, calculated as follows:

Standby charge, which reflects your personal access to the car for the year.
PLUS
Operating benefit, which represents the personal part of operating expenses paid by your company for the year.
MINUS
Reimbursements you make during the year to your employer against the standby charge or operating benefit.

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